Business Group, Think Tank Disagree on Need for Section 232 Tariffs

On the same day that 37 trade associations worked to draw attention to a renewed push to eliminate Section 232 tariffs, a left of center think tank published a paper disagreeing with the arguments that the Tariff Reform Coalition is making, that steel and aluminum sanctions cost more jobs in manufacturing than they saved at primary steel producers.

The Tariff Reform Coalition, led by the National Foreign Trade Council, says that domestic steel prices are up 160% since August 2019, and that manufacturers are having a hard time finding steel at any price, because of 12-week lead times. It said that while Section 232 tariffs are not the only reason for this strain, they contribute. They emphasized the increased production costs for the automotive sector, construction, appliances and more.

The Economic Policy Institute, which has at least two alumni serving at the White House Council of Economic Advisors, published a report March 24 that said steel employment rose after the Section 232 tariffs until the pandemic, and said at least 3,200 new jobs can be expected from investments at steel plants. “Despite benefiting U.S. steel producers and having no discernible impact on steel consumers, Sec. 232 import measures have been progressively undermined by nearly 108,000 product-specific exclusions through July 2020 alone and broad, countrywide tariff exemptions for roughly one-third of all imports,” the EPI report said.

In contrast, the Tariff Reform Coalition cited a Federal Reserve Board of Governors study that said there are about 75,000 fewer jobs because of the tariffs, and said the Commerce Department found 1,000 new steel producing jobs.

While EPI did not address the effect of steel prices on profitability at other manufacturers, they said there are “negligible causal effects” on the consumer goods they make, such as vehicles, household appliances, or steel used in construction. “Premature relaxation or elimination of Sec. 232 measures, in the absence of any concrete measures to eliminate excess capacity and trade-distorting policies that contribute to the global steel glut, would put the U.S. steel industry at risk, imperiling new investments and hundreds of thousands of good jobs in steelmaking,” the report said.

In a press call March 24, NFTC CEO Rufus Yerxa said the coalition is shifting its focus from trying to get Section 232 reform passed in Congress to convincing the administration to roll back Trump era tariffs. He said that 232 tariffs don't help American workers and divide us from our allies “We believe that any really objective assessment of the benefits and costs will lead to the conclusion that the negative impacts on manufacturers, on consumers, on exports and on our trading relationships outweigh any limited benefits to steel producers,” he said.

When asked why he believes such an assessment could be forthcoming at Commerce, given that Commerce Secretary Gina Raimondo said a few weeks ago that the tariffs have been effective, he said the trade groups strongly believe you cannot reach that conclusion when you look at how they've affected the economy as a whole.

“Obviously that was a comment that was made, but we still think it’s important for the administration to look closely at the record and hear from all parties,” he said. The Tariff Reform Coalition, which is also seeking rollbacks of Section 301 tariffs, is also asking congressional committees, including the Agriculture committees, to hold public hearings with witnesses from industries and farmers affected by the tariffs and retaliatory tariffs.

The United Steelworkers sought to amplify the EPI report, calling it “rigorous research into the impacts of the steel 232 measures.” The think tank report said China is not the only reason for excess capacity, and called out India, Brazil, Korea, the European Union and Turkey. It said the tariffs have caused the share of imported steel used in the U.S. to fall from 35% to 26%. The union said it is especially important that the tariffs remain, “given the fragile economic recovery in the wake of the Covid-19 pandemic.”